By John Kamwengu

As an ICT pundit, I must admit I was caught off guard when I first heard of Kenya’s Central Bank Digital Currency and even more embarrassed by the fact that I could not understand what it was all about. So I took a day off to download the paper from the CBK portal but even after reading it a second time, I could not get to figure out what a digital currency is. So I reminded myself that when you see a lion running in the bush, it must be chasing something because lions don’t run for fun. 

With that in mind, I let go of the CBK Digital Currency Paper and waited to see if someone will break it down for me in jungle speak.  Which animal wants to eat which one in this digital jungle?

If you are a Kenyan, then you know what M-PESA is, and you are probably so dependent on it, that you can now leave your home without a coin in your pocket, knowing that you have money in your M-PESA account. M-PESA has now grown to a point where we can call it a digital currency. Is this a bad thing? No, its just that if you analyze, you will note that M-PESA transaction fees are pretty high.

For instance if I transfer Kshs 1000/- from my bank to M-PESA it cost 0/- The same transaction from my M-PESA account to another M-PESA user costs 12/-. Consider also that the receiver will have to incur Kshs 28/- to withdraw the amount via M-PESA and Kshs 11/- if the same withdrawal were from my bank agent. This comes to a total transaction fee of Kshs 40/- by M-PESA and 11/- through my bank.  A significant difference especially if you scale that number to thousands of transactions.  

So why don’t we use bank to bank transfer if it’s cheaper? My response is first; habit. We are just used to M-PESA. We are hooked onto it in just the same degree and for the same reasons that we are hooked onto social media. The sound of the phone beeping followed by the short code ‘MPESA QIW35IP4GS you have received‘ gives us the same rush as the words ‘tuma fare’.  

The second reason why we are so dependent on M-PESA is because as humans we tend to be ruled by emotions. We are not rational beings as many believe they are. This irrationality makes us fear the alternative which is Pesalink, the interbank system. We don’t trust Pesalink yet because we have not used it enough to know what happens if you send money to the wrong user. We know that Kenyans are not easy to deal with. We know that if you send money to the wrong person it will take the intervention of the CID to get it back. How do banks and Pesalink handle this on their platform? We need to be assured that banks understand that money is very scarce in Kenya and as long we are not convinced they can handle our small transactions, then it will be a while before Mama Mboga considers Pesalink as a safe option. 

Which brings me back to the lion running in the bush. It must be chasing something or perhaps being chased by something more dangerous. What is this that has made the King of the jungle; Central Bank run? Could it be that M-PESA has become so dominant that it is now a parallel central bank?  Me thinks this is the predator making CBK run. The dominance of M-PESA has become so threatening that the regulator is now the hunted. There is another King ruling the ever expanding digital jungle. Could this be the King who is making CBK run? 

Consider what would happen, if today, the government and all large employers decided that instead of sending salaries to bank accounts, employees will be paid on phone via M-PESA. How would this affect the banking system? How would this affect loan recoveries, overdrafts, salary advances? 

Will it be a good thing or a bad thing? I don’t know, but this scenario is not far-fetched because almost every adult Kenyan has an M-PESA account, so why not pay directly to M-PESA? A simple move like that will enthrone M-PESA as the King of all jungles in Kenya and everyone, including the banks will have to pay homage to this new King.

Today, M-PESA tariffs are like national policies and so we must ask difficult questions. Should M-PESA be nationalized and made the de-facto digital currency? Or should the CBK go ahead and roll out another digital currency? We should also ask ourselves; are we being rational in our assessments or are these just tantrums of jealous lovers because we are not at the Safaricom bash? The truth is, some of us are jealous and some are dejected. The question is who is who.

Of all M-PESA’s unhappy suitors, none seems more injured than the local and international Tech community. They are mad. They are mad because in the absence of credit cards and any mass payment digital platform, you can’t launch any Tech product in Kenya without M-PESA. Its only this year that M-PESA released its API’s  that allow software to link automatically to their app. Before this, and the last 20 years of M-PESA rule can only be described as anguish in the digital economy?

Imagine the agony felt by organizations when they realize their mass market products in Kenya aren’t going anywhere without M-PESA and M-PESA is not playing ball. See, some products need a tweak of M-PESA, beyond the APIs and you can’t get that tweak done, unless M-PESA calls you to the table.  From the look of things, M-PESA has a full plate and will not clear this plate quickly because she lacks systems to protect innovation and build partnerships at the speed that the Tech community in Kenya is moving. This is the Tech gap in M-PESA and it is such a glaring gap, that it has now been picked up by politicians and could easily send Safaricom to an early grave. 

While some are for the idea of chopping up the company into little bits, I am not. I do not like the idea of murder because I am not sure if the gate-man on the other side of the world can take a small gift so as to allow a brother into the VIP lounge. So instead of death, I have decided to think life and creation. Instead of death I will think of birth. Instead of focusing on what M-PESA has not done I will think about alternatives and to my mind come several alternatives. One of this is the Central Bank Digital Currency. Maybe it’s time to procreate and bring to life another digital currency.

John Kamwengu is a computer science professional, a Microsoft Certified Solutions Developer , a trainer and consultant.  
Contact address P.O Box 1421-00100, GPO , Nairobi

Email [email protected]

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